A Money Mindset: Do You Have One?

money mindsetThink about your typical day. You’ll likely make hundreds of decisions as the day unfolds. A few of these choices will be big and the others small. Unless the choice to be made has heavy impacts, there’s a good chance you could go through your entire day without so much as giving things a second thought.

Your brain is programmed to automatically assess situations and make decisions as efficiently as possible. We don’t wrestle for hours on what shirt to wear to work (well, I’m sure some women probably do 😉 ) or how much toothpaste to put on our toothbrush. As humans, we are also very habitual in nature. We develop an ingrained set of patterns to which we customarily adhere.

That’s not to say we are always on autopilot. Of course we consciously go back and forth in trying to evaluate options for certain scenarios. Really, our days are filled with both streamlined, instinctual actions and some instances where we apply additional pontification.

How you approach all of these decisions is called your mindset. It’s the basic foundation by which you make less-involved, quick decisions as well as the more deliberative drawn out ones. Your mindset makes you unique. Sure most of us will have similarities with others in some capacity. But your mindset is part of what makes you, you.

Let me ask you this question though: What are the consequences if your mindset doesn’t naturally take into consideration the financial impacts of your decisions? How damaging can it be if money is not an evaluation criterion you use? Do you even have a money mindset?

My definition of a money mindset: For every action or decision you make, your mind processes and evaluates the financial ramifications.

The NON-Money Mindset in Action

Let me paint a picture of how someone who is lacking a money mindset might progress throughout a typical day:

  • Wakes up late and rushes to get out the door. In doing so, skips breakfast. Instead, purchases a pricey (and unhealthy) breakfast on the way to work along with an expensive gourmet coffee – a daily ritual.
  • Hears on the radio that favorite band is coming to town for a concert. Rushes to buy front row tickets online as soon as getting to desk at work.
  • Pays for the concert tickets with debit card forgetting there are not enough funds in the checking account. Incurs a hefty non-sufficient funds (NSF) fee.
  • Heads out to lunch and goes to trendy restaurant that has a high-priced menu.
  • Needs to pick up a few things from the store after work and does so without any comparison shopping. Goes to the high end grocery store to get commodity items that could be purchased for less at the discount grocery store.
  • On the drive home, sees a car that looks so sleek. Absolutely falls in love with the model and decides soon to purchase one. Makes plans to visit the auto dealership this weekend even though last car was purchased new less than 2 years ago and is not paid off yet.

While there are undoubtedly people like this out there, I’ll admit my example for someone not possessing a money mindset is a bit extreme. I’ve perhaps over-embellished to prove a point – you make decisions involving money multiple times every single day whether you realize it or not.

Why Having a Money Mindset is Critical

Money impacts nearly everything you do in life either directly or indirectly. It’s intricately involved in all of your actions and decisions. Thus, you need to think about the financial aspects for every decision you make. This may require only a few fleeting seconds for very minor choices. Or, by contrast, it could require hours or even days if you’re contemplating a huge life decision. Having a money mindset is imperative though – it must be a part of your decision making process. Here are a few reasons why:

  • Save money – If you’re thinking about money when you make a decision, chances are you’ll stand to save quite a bit overall. This isn’t to say you still won’t make absent minded financial mistakes or splurge here and there. You also don’t have to turn into a frugal loner. But you could stand to save a tidy sum by eliminating most negligent or careless decisions which will happen if you adopt a money mindset.
  • Brighter future – The cumulative effect of employing a money mindset can be exponential and lead to a much brighter future. Being cognizant of the financial consequences of all your decisions will likely make you tend to err on the side of conservative spending and wise investing. All of that “adds up” over time.
  • Peace of mind – Kicking yourself for wasting a bunch of money is all too easy to do after the fact. Using a money mindset will help you to achieve a greater peace of mind. Knowing you did your due diligence will be quite comforting.

Having a money mindset is easy to maintain once you get the hang of it. Just like with anything new, you might have to force yourself in the beginning especially if you’ve spent years not factoring money into your decision making processes.

And here’s a very important distinction. Having a money mindset is not about obsessing over money. The goal isn’t to be a miser and pinch every penny possible. You’re not supposed to stress or freak out about finances. Having a money mindset is merely factoring money into how you make your choices. Upon reflection, you may very well go with the more expensive brand name. Or perhaps you do treat yourself to a concert by your favorite artist after evaluating how the cost will impact your finances. You could even choose to take a job that pays less but offers a more acceptable work/life balance. The key is to involve money into all of your decisions. You’ll encounter instant benefits as soon as you incorporate a money mindset into your life. And, over the long run, such a thought process will pay huge dividends.

Do you have a money mindset? How important do you think having a money mindset is? What steps would you take to improve the financial aspect of your decision making process?

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Image courtesy of Klearchos Kapoutsis at Flickr.

22 Responses to A Money Mindset: Do You Have One?

  1. Jen @Sprout Wealth March 31, 2014 at 1:36 am #

    Now that I am more mature in many ways including where money and wise spending are concerned, I must say the right money mind set is there. But when I was younger, I would read items about frugal living but didn’t become conscious about spending until after I learned from experience.

    • Mr. Utopia March 31, 2014 at 5:57 pm #

      Learning from experience can be the hard way to go, but it’s necessary for lots of people. I’ve had a money mindset for as long as I can remember. I think I can always get better, but I’m fortunate enough to usually evaluate the financial impacts of decisions ahead of time.

  2. Kylie Ofiu March 31, 2014 at 4:02 am #

    I definitely have a money mindset and you are right, it is not about obsessing over money. I’ve learned to keep my money mindset, be aware but it is just second nature.

    • Mr. Utopia March 31, 2014 at 6:02 pm #

      Having your money mindset be second nature is the ideal place to be. The ability will continue to serve you well.

  3. Our brain is programmed to automatically make decisions when it takes to respond to immediate situations.This automatism goes behind any rational decision making process (i.e. financial planning, etc.).
    When we plan our finances, we engage our slow, rational processing system. When we are making daily choices, our fast processing system kicks in. There is where our mindset is key!
    Our mindset can kick in when we are least aware, creating perceptual biases and shaping our behaviors. That’s why, in my opinion, your post gets right into the heart of personal finance.
    Financial planning is great, but develop money mindset would be awesome and far more efficient!
    Thank you for posting,

    • Mr. Utopia March 31, 2014 at 6:05 pm #

      To me, financial planning is a sub-component of having a money mindset. If you don’t have a money mindset, you probably won’t be doing much financial planning. But, having and using a money mindset most certainly goes beyond financial planning.

  4. krantcents March 31, 2014 at 8:01 am #

    I tend to make my decisions early! I prepare for the next day the night before. I avoid carrying money so I won’t spend it. It helps that I take my lunch to work. I put almost all my money decisions on autopilot. I have automatic savings and utilize online banking to take of the rest. It simplifies my life considerably!

    • Mr. Utopia March 31, 2014 at 6:07 pm #

      And you wouldn’t have set all of that up or put yourself in those situations without a money mindset! Seems to be working quite well for you.

  5. Jon @ Money Smart Guides March 31, 2014 at 1:37 pm #

    Having the right mindset is crucial. You can know everything there is to know about personal finance, but if you have the wrong mindset, you will never get anywhere.

    • Mr. Utopia March 31, 2014 at 6:15 pm #

      Yep, that’s exactly right. That’d be like an athlete with top notch natural ability not having the proper mindset. In that case, he’d probably be complacent and not a student of the sport. That’s not a recipe for success and neither is having healthy personal finances without a money mindset.

  6. Little House April 2, 2014 at 6:35 am #

    I definitely have developed a money mindset over the years, but almost to the extreme. Sometimes I have to take a step back and remember money isn’t always the root of a decision (especially more important choices). If I can take money out of the decision and really analyze, “Is this something I want or want to do?” then factor the money back in, I’m usually able to come to a satisfactory conclusion.
    Little House recently posted…Build a House for Under $10,000? Oh Yes You Can!My Profile

    • Mr. Utopia April 3, 2014 at 7:08 pm #

      That sounds like a reasonable approach. Money does not need, and oftentimes shouldn’t, be the main focus. It should always be a consideration though.

  7. DC @ Young Adult Money April 2, 2014 at 9:50 am #

    It’s hard to NOT have a money mindset when you are a personal finance blogger, so I’d say I do have one. Your example was extreme but it’s easy to fall into that trap if you aren’t consciously practicing thinking the financial consequences through. Being creatures of habit is both a good and bad thing – good because once you are in the habit of approaching things with a money mindset it’s easy to stay that way. Bad because if you don’t approach things this way you can run into problems quick.
    DC @ Young Adult Money recently posted…How to Handle a Difficult BossMy Profile

    • Mr. Utopia April 3, 2014 at 7:06 pm #

      Agreed – habits are a double-edged sword. To changes the bad ones, particularly regarding money, you’ve got to want to change and then make the effort to do so.

  8. Ryan @ Impersonal Finance April 3, 2014 at 2:27 pm #

    “For every action or decision you make, your mind processes and evaluates the financial ramifications.” Right on. I think sometimes I spend too much time focusing on that, but I have to remember that there are very specific reasons I focus on decreasing my spending and increasing my wealth. I think now that I’ve developed a money mindset, I will never be able to shake it.
    Ryan @ Impersonal Finance recently posted…emergency fund in actionMy Profile

    • Mr. Utopia April 3, 2014 at 9:08 pm #

      Developing a money mindset is a good thing! You should be commending yourself. There’s no need to ever shake it. As I mentioned in the article, don’t obsess over money and don’t always make it the number one priority. However, considering and evaluating the money aspects of a decision, at least to some degree, should be something you strive to do. Keep it up!

  9. Mark Ross April 7, 2014 at 5:53 am #

    I have a money mindset, I’m a personal blogger so I think that’s pretty normal that I got one. Being able to know how to value money and handle it properly is really a key to developing a nice money mindset of your own, that’s just what I think.
    Mark Ross recently posted…7 Fun Outdoor Activities You Can Do Without Spending Too Much MoneyMy Profile

    • Mr. Utopia April 8, 2014 at 8:29 pm #

      Practice makes perfect when it comes to having a money mindset. My wife didn’t naturally have one when I met her, but she’s come a long way in automatically evaluating the money context of her decisions.

  10. Curt Worrell November 17, 2014 at 10:30 am #

    Mr. Utopia, thanks for this post, this is an interesting conversation. I believe that mindset is everything for all aspects of life. But I also know that consistency can be difficult for anyone. The mindset has to become a habit and sometimes that’s where we can all struggle. But with practice, like you said, it is possible. Also, I agree with you that it shouldn’t be about obsessing and putting out negative energy about your finances… that will definitely go against the mindset you are trying to create in the first place.
    Curt Worrell recently posted…CLP 036 – Tiffany Aliche: The Necessity of Living RicherMy Profile

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